Are the windfall benefits over for tech workers?

Will a lower variable pay increase the tendency to quit?

The tech workforce may be disappointed but their exits are closed as companies across the industry face margin pressures. Employees are getting higher-than-usual hikes and promotions because of the pandemic-induced lull in the hiring frenzy. However, IT firms had warned of impending adverse conditions- high inflation and an impending recession in the US. Firms are taking a calculated risk, knowing that there will be fewer exit routes in the middle and senior ranks as startups and other internet companies are also slow in hiring due to paucity of funds.

How high do salaries cost in IT companies?

A large chunk of tech firms’ spending – up to 60-70% – goes towards wages, followed by infrastructure and travel expenses. This year, companies have introduced hikes and promotions, but variable pay, which is directly tied to businesses every quarter, was affected. Companies can calibrate that amount as holding hikes and promotions will lead to more exits, while variable pay may see a turnaround if business improves over the next few quarters. Recruiters say tech firms aren’t ruling out hikes, but a delay or 70% rollout isn’t a complete washout.

What caused the increase in wage costs in the technical sector?

IT hiring has boomed over the past two years as businesses rush to digitize their processes. Tech firms saw record attrition, and 60-70% wage increases became commonplace. Companies were forced to hike higher than usual to retain employees, which affected margins. Years later, he increased the salaries of thousands of graduates who were absorbed, adding to the cost.

Why are work options reduced?

Employees who could have hopped between the startup, tech services and internet sectors are now left with fewer options. The startup segment has been taking off continuously for the past three quarters as funding from global private equity and venture capital firms dries up. Previously, a tech worker could choose between a more specialized IT firm versus a startup with more stocks and bonuses. For specialist, the road has become tough for global tech firms like Microsoft, Apple, Google as they too are on cautious recruitment mode.

Are tech salaries likely to flatten out next?

The hiring frenzy may subside over the next few quarters, but specialist roles will always be in demand and can fetch high salaries. Meanwhile, IT companies have saved on infrastructure cost as work from home continues. Travel among office-goers has not yet reached pre-pandemic levels. Hence, companies may still have some scope for wage hike. However, if there are no major deals in the next few quarters, there may be cause for concern for freshers and those on the bench.

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